Jul

7

Here are one person's notes on a recent talk by Jeffrey the wizard of Gundlach:

Gundlach: As a percentage of GDP, government debt rose from 161% when Reagan took office, to 279% when George W. Bush became president, to 353% when Barack Obama entered the Oval Office. Gundlach said he was "sympathetic" to those who advocated the U.S. should simply "print and pay" its way out of the current predicament and hope inflation would devalue existing debt so that it becomes easier to pay down. But he added there were too many deflationary forces to render such an outcome likely. The jobless recovery has created "a huge generational class" of unemployed people who are likely to make their voices heard at the ballot box. While the current mood in Washington centers on austerity and spending reductions, Gundlach says that could potentially exacerbate the unemployment problem. At that point, "print and pay" might become more palatable than a Depression." Gundlach did not seem fazed by a failure by Congress to approve a new debt ceiling limit in the short term, arguing it would not matter that much if the government was late "with one coupon payment." Another major problem he noted was housing, which he said could fall another 10%.


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